Israeli PM Ehud Olmert is quizzed again over corruption claims

The Jewish state's chief prosecutor revealed investigators suspect he took envelopes full of cash from New York fundraiser Morris Talansky.

He is also accused of giving favours in return for a discount on the purchase of a Jerusalem home.

Probe: Ehud Olmert, speaking in Latrun yesterday, was questioned again today

The leader, who was first questioned three weeks ago, has denied any wrongdoing but said he would resign if charged.

This morning police arrived at Mr Olmert's home and are understood to have quizzed him over claims he helped Mr Talansky obtain business contracts in South America while in previous government posts.

And a police source said officers would travel to the U.S. "in the coming weeks to continue the investigation in the Olmert case".

Mr Olmert acknowledged earlier this month that Talansky raised funds for his two successful campaigns for mayor of Jerusalem in 1993 and 1998, a failed bid to lead the right-wing Likud party in 1999 and a further internal Likud election in 2002.

Prosecutors want Mr Talansky to give evidence under oath on Sunday before a court order banning him from leaving Israel expires the following day.

But Olmert's lawyers will ask the Jerusalem District Court  today to delay the testimony by two weeks.

The Israeli Supreme Court this week rejected Olmert's petition to stop a lower court from hearing preliminary testimony from Mr Talansky.

Mr Olmert has said his former law partner handled the details, voicing confidence the attorney made sure proper procedures were followed.

Israeli media today reported that questioning of Olmert would focus on the attorney's evidence.

A judicial source said the sums involved totaled hundreds of thousands of dollars.

Mr Olmert is also under criminal investigation into accusations that he gave favours in return for a discount on the purchase of a Jerusalem home, and appointed cronies to a state business authority. He has said the suspicions are baseless.

Last November police concluded there was insufficient evidence against him over his role in the sale of state-owned Bank Leumi when serving as finance minister.

Israel and Syria, in a surprise move, announced on Wednesday that they had begun indirect peace talks in Turkey, a move many Israelis believed was meant to divert attention from Mr Olmert's various corruption probes.

Yesterday the PM briefly suspended a speech he was giving when demonstrators marched in front of him, carrying a banner saying "The people are with the Golan," in protest at the talks with Syria.

Damascus has demanded the return of the Golan Heights, a strategic plateau Israel captured in the 1967 Middle East war.

Olmert has not said publicly that Israel would give up all of the area.